Jain Irrigation Systems reported good growth and stable margins in the quarter ended December 2010.
Its sales rose by 15% to Rs 736 crore, over the September quarter or on a sequential basis. Its net profit too rose by 15% to 71 crore. Compared to the same period a year ago, its net profit rose by 25%.
Operating profit has shown outstanding growth, up by 69% over the year ago period, partly due to lower expenditure growth. Its total expenditure has risen by just 12 % to Rs 555 crore. Other operating rose four-fold to Rs 43 crore, as it includes Rs 39 crore representing VAT refunds due since October 2009.
The operating profit margin remained stable at 22% for the quarters ended December and September, but has improved a notch from the margin of 20% for the quarter ended December 2009.
But interest costs were up by 27% and depreciation up by 22%. Net profit margin which was at 10% for the past few quarters is up from 9% in the December 2009 quarter.
The company reports two segments, Hi-tech agri inputs and Industrial products, with sales in these two segments rising by 15% and 16% respectively. Among its business segments, micro irrigation segment’s sales are up by 19%, PVC sheets segment’s sales are up by 15% and piping and food businesses are at same levels.
The company plans to issue bonus shares but with differential voting rights (DVR equity shares). The company intends to issue one DVR share for every 20 shares. The voting right of one DVR equity share would be one tenth that of an ordinary equity share.
The share price of the company has fallen 5% from the previous close of Rs 225 to Rs 215, close to the weekly low of Rs 213. Investors do not appear too impressed by its results nor by the issue of DVR bonus shares.